Abstract
Currently, there are hundreds of Bitcoin exchanges on the market, so
choosing a reliable exchange is a critical issue for users. We know that
the amount of Bitcoin holdings is an essential indicator for evaluating
an exchange, but people have very few ways to access this information.
Besides, many reports indicate that the trading volumes of most Bitcoin
exchanges do not match their real situations, and the fake volume has
become an unspoken rule of the whole industry. It causes the public to
doubt the actual amount of Bitcoin owned by each exchange.
To solve the problem of information asymmetry between users and
exchanges, we propose a method for tagging Bitcoin addresses of
exchanges. Through vertical, forward, and backward address mining, the
method can utilize only one or several addresses of an exchange to find
out all its addresses and distinguish different address types: deposit
wallet, hot wallet, and cold wallet. Then the balance and transfers of
the exchange can be further obtained through these addresses, helping
users understand the real Bitcoin holdings of the exchange. Several
experiments are conducted to evaluate the effectiveness of the proposed
Bitcoin address tagging method.
Our method has very little dependence on off-chain information. Only one
address is needed for each exchange as a seed to find out all the other
addresses. Such a seed address can be easily obtained by depositing some
Bitcoin into the exchange or withdrawing some from it, which makes our
method feasible for all exchanges.